The volume and value of deals involving British targets has plunged to its lowest level in 17 years, new research shows.
The volume and value of deals involving British targets has plunged to its lowest level in 17 years, new research shows.
A fall of 25 per cent across both contributing factors was recorded by Grant Thornton, with the accountancy firm’s corporate finance team expecting the trend to continue into the first half of the new year.
A total of 448 M&A transactions worth £18.1 million were made in the UK during the fourth quarter of 2011.
The figures represent the weakest performance for British target deals since the third quarter of 1994 when 440 deals worth £4.2 billion were recorded.
Stephen Baker, corporate finance partner at Grant Thornton, comments: ‘Even the more stable mid-market deals involving companies valued at less than £500 million have seen a drop in number, although the total mid-market deal value only dropped by 10 per cent to £9.2 billion in the last quarter.’
Statistics for the entire of 2011 show that 2,342 deals with a total value of £82.3 billion were announced, a fall of 12 per cent in value compared to the previous year (£93.6 million). Deal count stacked 2,342 to 2,423 in favour of 2010.
The year-end results are the lowest since 2003 and represent less than half of the 2007 peak.
While deal values and volumes involving UK targets has dropped Baker says that there is optimism regarding the amount of capital being spent by UK companies on Indian purchases.
Baker adds: ‘Even though the Eurozone debt crisis has depressed the total number and value of outbound deals, there are currently no signs that British bidders are shying away from making strategic acquisitions in emerging markets.’
As well as those seeking strategic buys in 2012 Baker sees a rise in the number of distressed deals being initiated by lenders who are questioning the logic of refinancing again as a feature of the new year.
He adds: ‘We generally expect an increasing proportion of both corporate debt and acquisition finance to come from sources other than banks.’
